PPT REGARDING LLM ABOUT WAGER CONTRACT. Wager in simple terms is to gamble. In a wager, two parties are involved, both of them promising to pay a fixed amount on the happening of an uncertain event in the future. The most essential ingredient is that both parties have an equal opportunity to win or lose. Here, parties enter into a contract only for the sole purpose of gaining or losing and do not have any vested interest in the event itself. Hence, wagering contracts can be regarded as betting or gambling contracts. Such contracts are void and unenforceable in courts of law. This article presents an overview of wagering contracts under Indian law.

1. Banaras Hindu University
Faculty of Law
Presentation of Insurance Law
Topic-“Insurance Contracts: Wager and Aleatory
Submitted By Submitted To
Name- Gautam Kumar
23425LLM017 Dr. Dolly Singh
Session- 2023-24

2. Contents
 Contract of Insurance
 Essentials of Contract of Insurance
 Aleatory Nature of Insurance
Contract
 Characteristic of Aleatory Contract
 Contract of Wager
 Essential Element of Wager
 Is an insurance contract a wager?
 Distinction between Insurance
Contract and Wagering Contract
 Conclusion

3. Contract of Insurance
A contract of Insurance is a contract either to indemnify a person against
loss which may arise on the happening of an event or to pay a sum of money
on the happening of some or any event for an agreed consideration.
When two parties enter into a contract wherein one party, in exchange of
money called premiums, agrees to pay the other party a certain lump sum of
money on happening of a certain event which may usually cause loss to the
party paying premium is called a contract of insurance.
In this type of contract, the insurer promises the insured party that he will
save or indemnify him from losses caused by a particular contingent event, on
the payment of an amount called “premium”.

4. Essentials of Contract of Insurance
 It should be a valid contract
 It must be contract of Utmost Good Faith,
 Insurable Interest must be there,
 It Should be based on principle of Indemnity,
 There should be right of Subrogation,
 Principle of Proximate Cause is vital,
 Principle of Contribution,
 Principle of loss minimization etc.

5. Aleatory Nature of Insurance Contract
An aleatory contract is a type of agreement in which the parties involved are subject to
uncertain events that determine the value and performance of their legal obligations. This type
of contract is contingent on the occurrence or non-occurrence of specific events, usually
outside the control of the involved parties.
Sir Frederick Pollock, in "A Digest of the Law of Contracts" (1888), stated that aleatory
contracts are "those in which the performance of one or both parties depends on an uncertain
event.“
Sir William Anson, in his work "Principles of the English Law of Contract" (1884),
described aleatory contracts as those "where performance by one party depends upon the
happening of an uncertain event.“
Sir John William Salmond, in "Salmond on Jurisprudence" (1902), define aleatory
contracts as those "whose fulfilment depends on the occurrence of an uncertain event, and in
the happening of which the parties have no control.

6. Characteristic of Aleatory Contract
Risk Transfer: Aleatory contracts allow for the transfer of risk from the insured to the
insurer. The insured pays a premium, and in exchange, the insurer agrees to pay for covered
losses. This transfer of risk allows the insured to protect themselves from financial loss in the
event of an unforeseen event.
Protection against uncertainties: Aleatory contracts protect parties from unforeseen
events and provide financial security, especially in insurance contracts, where policyholders
receive compensation for losses incurred due to unforeseen events such as illness, accidents,
or natural disasters.
Flexibility: Aleatory contracts accommodate varying degrees of risk appetite, as parties
can choose their desired level of exposure to uncertain events. In investment agreements, for
instance, diversified portfolios can be constructed based on the individual's risk tolerance
and investment goal

7. CONTRACT OF WAGER
 In "Chitty on Contracts," noted that a wager is "an agreement between two parties that
a certain sum of money or other stake shall be paid or transferred to one of them on the
happening or not happening of an uncertain event.“
 Sir John William Salmond, a legal scholar and professor, defined a wagering contract
as "a promise the performance of which depends upon an uncertain event and which is
made with a view to securing a profit dependent upon the happening of that event.“
 Sir William R. Anson, defines Wager as “a promise to give money or money’s worth
upon the determination or ascertainment of an uncertain event, the consideration
being either something given or promised to be given by the other party in the event
determining in a particular way.”

8. Essential Element of Wager
 Uncertain Event
No other Interest in the Event
Neither Party have control over the event
No other interest in the event

9. Insurance: contract a wager?
A wagering contract is one in which A promises to pay B a certain sum of money on such a
contract is that one party is to win and the other is to lose upon a future event which at the time
of the contract is of uncertain nature.
In a contract of insurance also there is a fair amount of uncertainty involved. That’s why there
are two opposite views regarding the issue that whether insurance contract is a contract of
wager or not.
According to Lord Bramwell, in Salt v. Northampton [1892] AC 1, 21,
“All life assurance is a sort of wager. I stake 20 euro a year as long as I live, against 1000
euro to be paid to my executors when I die. If I die early I win, if I live long I lose.”
Sir William R. Anson was of the view that there is not much difference between insurance on
a cargo and the wager in a horse race. He while commenting on Wilson v. Jones, (1867) LR 2
Exch 139., stated that “All contracts of insurance are wagering contracts even through there
is an insurable interest, but they are permissible under law.” He further stated that though
insurance is a wagering contract it is permitted by law and therefore enforce by law.
The contract of insurance since the early stages had been recognized as a wagering contract.

10. Distinction:
Wilson v. Jones – Willis J.- “Distinction between wagering contract and one which is not depends
upon whether a person making it has or has not an interest in the subject matter of the contract.”
In the famous case of Lucina v. Craufurd, it was opined that:
“There is a material distinction between a contract of wager and a contract of insurance.
The wager may have any speculative chance or expectation as the subject matter, but in an
insurance contract a chance or expectation cannot be subject matter as it definitely
presupposes lose of some right of property either in possession or ownership.”
Tyrie v. Fletcher- observation- Contract of insurance isnot the wager – Reason- (i) assured doesn’t
create the risk of loss – unlike in pure wager; (ii) In pure wager (unlike in insurance contract)- interest
of the contracting parties in the event is created by the fact that they have contracted to pay each other
certain sum based on event; Where as an insurance motive for the contract springs from the existence
of something which may be lost and danger of loss to person who seeks insurance.

11. Contd…
Also in the famous case of Lucina v. Craufurd, it was opined that:
“There is a material distinction between a contract of wager and a contract
of insurance. The wager may have any speculative chance or expectation
as the subject matter, but in an insurance contract a chance or expectation
cannot be subject matter as it definitely presupposes lose of some right of
property either in possession or ownership.”
From the above it is understood that how the understanding developed
regarding the issue whether contract of insurance is wager or not, and
we were able to make a clear cut distinction between insurance contract
and wagering contract.

12. Distinction between Insurance Contract and Wagering Contract
Distinguishing Factors: When comparing a contract of
insurance with a wagering contract, several distinguishing
factors emerge
1. Risk vs. Chance
2. Insurable Interest
3. Public Interest
Contract of Insurance Wagering contract
It is a contract to indemnify the loss. It a promise to pay money or money’s worth
on the happening or non happening of an
uncertain event.
Valid and enforceable Void and unenforceable agreement
The crux of insurance contract is
mutual consideration i.e. premium
and compensation amount.
There is no consideration between
the parties, there is only gambling
for money.
They are beneficial for the society They have been regarded as
against public welfare.

13. Conclusion
In essence, for insurance contracts, the overarching goal is to provide financial
protection and stability to individuals and businesses. By embracing these
principles (like aleatory, indemnity etc.) responsibly, the insurance industry
plays a vital role in helping individuals manage risks and recover from
unforeseen events
From the above discussion we can conclude that the nature of contract of
insurance Aleatory because the parties involved are subject to uncertain events
contingent to the contract. And it is also the contract of Wager depends on the
happening of the event.